Lucrative illegal market for crop land a key cause of fires: Researcher

This picture taken from a Kamov helicopter operated by Indonesia's Disaster Mitigation Agency shows fires burning at a concession area in Pelalawan, Riau province on Sept 17, 2015.
This picture taken from a Kamov helicopter operated by Indonesia's Disaster Mitigation Agency shows fires burning at a concession area in Pelalawan, Riau province on Sept 17, 2015. PHOTO: AFP

A lucrative illegal market for land to plant crops such as oil palm is a major cause of annual fires in Indonesia, a senior forestry researcher says, with the racket driven by complicit local officials and the global demand for commodities.

Dr Herry Purnomo is part of a team at the Bogor-based Centre for International Forestry Research looking at the political economy of fires and haze in Indonesia.

The political economy, he explained, refers to how economic actors at different levels influence and weaken law enforcement at all levels. "The actors can be individual powerful elites that are connected to the companies," he added.

PROFITING BY BURNING

If you grab the land, the forest - it can be concession land or state land - you can sell it. My research shows that the price is around eight million rupiah (S$800) per hectare. But if you burn that land, the price will increase.

DR HERRY PURNOMO of the Bogor-based Centre for International Forestry Research

Dr Purnomo said there is a well- established market for abandoned or conflict land, with land cleared by burning fetching a premium. Using excavators and other heavy equipment to clear the land is costly and time- consuming.

"You need to understand that the fire and haze create a lot of money. Quite a lot of money. There is a market for burned land and also it is a way for cheap and quick land preparation for HTI (pulpwood) and oil palm," he told The Straits Times in an interview last week.

"Because if you grab the land, the forest - it can be concession land or state land - you can sell it. My research shows that the price is around eight million rupiah (S$800) per hectare. But if you burn that land, the price will increase," he said.

"Some people can claim that land and can sell to the network of people. And the buyers can be someone in Jakarta, Bogor, everywhere... It can be 10ha, 20 or even 100ha."

Data shows mid-level investors can come from places outside Indonesia, such as Malaysia, he added.

According to Dr Purnomo, the price per hectare is US$665 (S$950) after the land is slashed and cut. If the land is burned, the price goes up about US$200 per hectare: a more or less 30 per cent rise.

"There is a market for people who mostly prepare for oil palm. You can imagine if they grow the oil palm, after three years, then the price of that land can reach US$3,077 per ha," he said, basing his research on land prices in Sumatra's Riau province.

"This provides a huge incentive for people to buy that land and try to grow the oil palm. No bank will give you that kind of profit."

Trust is an important part of the deal. "This is like organised crime. My friends who have that land never see that land. But they receive photos. They got a return from that investment. You don't need to bribe people. Because there are people who manage the land - you pay... and they will work through their connections and you will get the return," Dr Purnomo said.

He said the illicit land deals can also involve land inside big company-owned concessions.

"Not all land within the concession is actually enforced. That is actually a huge problem. So they receive the land, but some land is still in conflict and then the government and concession owner can't secure that land so it is becoming a source of... burning... even inside the concession."

This is a particular problem with pulpwood concessions because of the way the land is given by the national government. A company pays for the licence for a concession and is responsible for everything inside, including communities who are often not consulted on the deal. This often leads to conflicts with the company.

Dr Purnomo also said it is very hard for big agricultural companies to really know what is going on in their supplier concessions. Some big palm oil and pulpwood companies have dozens of suppliers.

"Even the big companies operate in a big landscape but are divided into smaller companies that are connected, affiliated or are subsidiaries of the big companies.

"To me there is not enough monitoring (by the parent companies). The monitoring system is not in place. There are many things happening on the ground. It is not as though, if you are good, the people in your company are good."

A version of this article appeared in the print edition of The Straits Times on September 28, 2015, with the headline 'Lucrative illegal market for crop land a key cause of fires: Researcher'. Print Edition | Subscribe